Mr Poon Panitchpibun, money market strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank, revealed that the baht opened this morning at 35.60 baht per dollar, “stable, almost unchanged” from the previous day’s closing level.
During the previous night the baht moved sideways (oscillating in the range of 35.52-35.64 baht per dollar) amidst the risk-taking atmosphere of the US financial market. That puts pressure on the dollar to continue moving within the range. In addition, market players are waiting for additional new factors from Thursday to Friday, such as statements from Fed officials. Results of the US 30-year government bond auction and adjustments to the Seasonal Factor of the US CPI inflation rate.
The atmosphere in the US stock market Still in a risk-on condition, supported by reports of the operating results of listed companies during this period which is still bright. Meanwhile, major technology stocks continued to rise, led by Meta +3.3%, Nvidia +2.8%, leading the Nasdaq technology stock index to rise +0.95%, while the S&P500 index closed the market +0.82%
On the European stock market side, the STOXX600 Index fell -0.23%, weighing on concerns about the potential slowdown in the Eurozone economy. From the report of industrial production in Germany in December, the contraction continued worse than expected. In addition, the European stock market also faced additional pressure from Statements by European Central Bank (ECB) officials who repeated their stance that they are not in a hurry to cut interest rates. The rise of major US technology stocks also had a positive effect on European technology stocks, led by ASML +1.9% , SAP +1.0% and the rise of technology stocks This helped to support the European stock market generally to decline not much.
On the bond market side, although the results of the US 10-year government bond auction are a good reflection of the market players’ demands, the atmosphere is open to risks in the US financial market. Including statements from Fed officials reiterating their stance that they are in no rush to cut interest rates, this has resulted in US 10-year bond yields still fluctuating close to the 4.12% level In the short term, we expect market players. waiting to follow economic data reports Important for the US, especially improving Seasonal Factor US CPI inflation rate If economic data is reported during this period Still coming out better than expected. This will cause market players to gradually lower their expectations of frequent Fed interest rate cuts. As a result, US 10-year bond yields may be more volatile. Therefore, we would like to emphasize that Market players should focus on the Buy on Dip strategy to reduce the risk of loss when looking at the overall or Total return Profit. If the US 10-year bond yield can rise above the 4.20% level, it will more likely. gradually interested in buying
On the side of the currency market The general dollar fluctuated to the side amid the mood in the US financial markets. which is still in a state of exposure to risk Depressed demand for the dollar But the dollar still has some support. From the perspective of Fed officials who repeat their stance that they are in no rush to cut interest rates. As a result, the general Dollar Index (DXY) still oscillates near the level of 104 points (oscillating within a range of 103.9-104.2 points) Regarding the price of gold. Because the financial market still has no new factors, the general gold price (COMEX gold contract to be introduced in April) is still fluctuating in the zone of 2,050 dollars per ounce.
In this regard, we estimate that If the gold price rebounds to the resistance zone around 2,060-2,070 dollars per ounce. Some market players may start selling gradually to take profit on the rebound from the gold price support zone. This flow of transactions will help support an appreciation of the baht. Or at least it could slow down the depreciation of the baht while in the zone of 2,030 dollars per ounce. Looks like a short term helpline. that players in the market are gradually waiting to buy gold during this period and a strong purchase of gold in the hosting zone will be a factor that will pressure the baht to depreciate.
For today, we expect market players to wait to assess China’s economic recovery prospects through the January CPI inflation and PPI inflation reports.
On the US side the market will wait to keep an eye on the report on the number of people applying for unemployment benefits (Unemployment Claims), including statements from Fed officials and the results of the US government bond auction 30 years, which could affect US bond yields during this period due to the auction 30-year US government bonds this time had fairly high volume. causing market players to wait and see What will demand for 30 year US bonds look like?
About the trend of the baht value We estimate that the results of the MPC meeting the previous day led to Most of the analysts especially foreign analysts They have adjusted their opinion that the MPC may start to gradually reduce interest rates from a meeting the month of April. This may be a factor that puts pressure on the baht during this period, which may fluctuate and depreciate, however, we estimate that the depreciation of the baht may also be limited. If the dollar does not clearly continue to strengthen, foreign players may also assess, if the MPC is in fact able to gradually reduce interest rates. It may have a positive impact on Thailand’s economic outlook and gradually return to buying more Thai stocks. We evaluate that the resistance zone for the baht during this period may be in the zone of 35.70-35.75 baht per dollar.
In this regard, we believe that we should keep an eye on the direction of the Chinese financial market. after in the past The Chinese stock market rose steadily higher. Amidst hopes for economic recovery and support for confidence in the stock market from the Chinese authorities. which helps support the Chinese Yuan (CNY) So, if Chinese economic data reports during this period, such as CPI inflation and PPI Producer Price Index, come out better than expected. Reflecting the improving trend of China’s economic recovery, it may encourage the Chinese Yuan to strengthen somewhat. This will be good for Asian currencies as well, but overall the baht does not have clear factors to support its appreciation. Moreover, the market is still expecting about 2 interest rate cuts from the MPC this year, causing the baht to still not be able to strengthen. Until it broke out of the support zone of 35.40-35.50 baht per dollar. It is not easy in the short term unless the dollar clearly reverses its downward direction. We must wait to see the report on the US CPI inflation Seasonal Factor improvement this Friday.
We would like to emphasize that the volatility of the baht during this period was higher than the historical average. (Looking at the weekly baht frame) clearly cause us to keep the advice and Entrepreneurs should use a variety of hedging tools, such as Options, to increase efficiency when protecting against exchange rate risk. And in addition to using the tools mentioned above Opting for transactions in local currency is another interesting way of managing exchange rate risk. Entrepreneurs should compare transaction costs and hedging plans before making every decision.
Looking at the baht today It is expected to be at the level of 35.50-35.75 baht / dollar.
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